THICK END OF THE WEDGE
PETER BRUCE: Cyril is king? Not so fast, businesspeople
The ANC race is too close to call, and even if Ramaphosa does win, he may not have the freedom to act as his supporters think he will
I sometimes think business, whatever that may mean – company bosses, financial markets or just plain old economists – lives in a parallel universe. I’ve just read a news report that says options contracts on the rand that expire around the time the ANC is expected to vote in a new leader, are markedly high. Traders, says a Reuters report, are betting on R13.20/$ against the current spot price of R13.70/$. Trading is guessing. These people then are betting that the outcome of the ANC vote, round about December 20, will be good — that is to say that ANC (and South African) deputy president Cyril Ramaphosa will beat his rival, Nkosazana Dlamini-Zuma. It partly explains the strength of the rand in the immediate aftermath of the sovereign ratings downgrade by S&P Global last Friday. So strong is the conviction in the markets that Ramaphosa has the battle won that the volume of options traded on Monday this week, according to Reuters, was almost three times the monthly average.
That...
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